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Sushil Kumar Modi said requirement for intra-state movement of goods of more than Rs 50,000 value would be introduced in phases

The GST provision requiring transporters to carry an electronic way bill or e-way bill when moving goods between states should be implemented from April 1, a group of state finance ministers recommended on Saturday.GoM head and Bihar Deputy Chief Minister Sushil Kumar Modi said the requirement for intra-state movement of goods of more than Rs 50,000 value would be introduced in phases after assessing the response for inter-state movement.

We recommended that from 1st April 2018 E-Way bill should be made mandatory. This is subject to the approval of GST Council: Sushil Modi at the GoM (Group of Minister) to resolve IT challenges faced in GST implementation #Delhi pic.twitter.com/PtH0vt5Hv7

— ANI (@ANI) February 24, 2018

After implementation of the Goods and Services Tax (GST) from July 1, the requirement of carrying e-way bill was postponed pending IT network readiness.

It was implemented from February 1 but the system crashed and its implementation was deferred.Modi said the recommendation of the panel would be considered by the GST Council at its meeting on March 10.

26 to 30 Lakh E-Way bills are expected to be generated when we are expected to implement E-Way bills by 1st April 2018: Sushil Modi, Deputy CM & Finance Minister of Bihar at the GoM (Group of Minister) to resolve IT challenges faced in GST implementation #Delhi pic.twitter.com/GyEFrPzuhH

— ANI (@ANI) February 24, 2018

Besides plugging tax evasion, the e-way bill is supposed to boost revenues by 15-20 per cent.E-way bill is an electronic way bill for movement of goods which can be generated on the GSTN (common portal). Movement of goods of more than Rs 50,000 in value cannot be made by a registered person without an e-way bill.The e-way bill can also be generated or cancelled through SMS. When an e-way bill is generated, a unique e-way bill number (EBN) is allocated and is available to the supplier, recipient, and the transporter.

I am directed to issue clarification with regard to the following issues approved by the GST Council in its 25th meeting held on 18th January 2018:-

Sr. No.

Issue

Clarification

1.

Is hostel accommodation provided by Trusts to students covered within the definition of Charitable Activities and thus, exempt under Sl. No. 1 of notification No. 12/2017-CT (Rate).

Hostel accommodation services do not fall within the ambit of charitable activities as defined in para 2(r) of notification No. 12/2017-CT(Rate). However, services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent are exempt. Thus, accommodation service in hostels including by Trusts having declared tariff below one thousand rupees per day is exempt. [Sl. No. 14 of notification No. 12/2017-CT(Rate) refers]

2.

Is GST leviable on the fee/amount charged in the following situations/cases: –(1) A customer pays fees while registering complaints to Consumer Disputes Redressal Commission office and its subordinate offices. These fees are credited into State
Customer Welfare Fund’s bank account.

(2) Consumer Disputes Redressal Commission office and its
subordinate offices charge penalty in cash when it is required.

(3) When a person files an appeal to Consumers Disputes Redressal Commission against order of District Forum, amount equal to 50% of total amount imposed by the
District Forum or Rs 25000/- whichever is less, is required to be paid.

Services by any court or Tribunal established under any law for the time being in force is neither a supply of goods nor services. Consumer Disputes Redressal Commissions (National/ State/ District) may not be tribunals literally as they may not have been set up directly under Article 323B of the Constitution. However, they are clothed with the characteristics of a tribunal on account of the following: –(1) Statement of objects and reasons as mentioned in the Consumer Protection Bill state that one of its objects is to provide speedy and simple redressal to consumer disputes, for which a quasijudicial
machinery is sought to be set up at District, State and Central levels.

(2) The President of the District/ State/National Disputes Redressal Commissions is a person who has
been or is qualified to be a District Judge, High Court Judge and Supreme Court Judge respectively.

(3) These Commissions have been vested with the powers of a civil court under CPC for issuing summons, enforcing attendance of defendants/witnesses, reception of evidence, discovery/production of documents, examination of witnesses, etc.

(4) Every proceeding in these Commissions is deemed to be judicial proceedings as per sections 193/228 of IPC.

(5) The Commissions have been deemed to be a civil court under CrPC.

(6) Appeals against District Commissions lie to State Commission while appeals against the State Commissions lie to the National Commission. Appeals against National Commission lie to the Supreme Court.

In view of the aforesaid, it is hereby clarified that fee paid by litigants in the Consumer Disputes Redressal
Commissions are not leviable to GST. Any penalty imposed by or amount paid to these Commissions will also not attract GST.

3.

Whether the services of elephant or camel ride, rickshaw ride and boat ride should be classified under heading
9964 (as passenger transport service) in which case, the rate of tax on such services will be 18% or under the heading 9996 (recreational, cultural and sporting services) treating them as joy rides, leviable to GST@ 28%?

Elephant/ camel joy rides cannot be classified as transportation services. These services will attract GST @ 18% with threshold exemption being available to small service providers. [Sl. No 34(iii) of
notification No. 11/2017-CT(Rate) dated 28.06.2017 as amended by notification No. 1/2018-CT(Rate) dated 25.01.2018 refers]

4.

What is the GST rate applicable on rental services of self-propelled access equipment (Boom Scissors/ Tele handlers)? The equipment is imported at GST rate of 28% and leased further in India where operator is supplied by the leasing company, diesel for working of machine is supplied by customer and transportation cost including loading and unloading is also paid by the customer.

Leasing or rental services, with or without operator, for any purpose are taxed at the same rate of GST as applicable on supply of like goods involving transfer of title in goods. Thus, the GST rate for the rental
services in the given case shall be 28%, provided the said goods attract GST of 28%. IGST paid at the time of import of these goods would be available for discharging IGST on rental services. Thus, only the value added gets taxed. [Sl. No 17(vii) of notification No. 11/2017- CT(Rate) dated 28.6.17 as amended refers].

5.

Is GST leviable in following cases:(1) Hospitals hire senior doctors/ consultants/ technicians
independently, without any contract of such persons with the patient; and pay them consultancy charges, without there being any employer employee relationship. Will such
consultancy charges be exempt from GST? Will revenue take a stand that they are providing services to hospitals and not to patients and hence must pay GST?

(2)Retention money: Hospitals charge the patients, say, Rs.10000/- and pay to the consultants/ technicians only
Rs. 7500/- and keep the balance for providing ancillary services which include nursing care, infrastructure facilities, paramedic care, emergency services, checking of
temperature, weight, blood pressure etc. Will GST be applicable on such money retained by the hospitals?

(3) Food supplied to the patients: Health care services provided by the clinical establishments will include
food supplied to the patients; but such food may be prepared by the canteens run by the hospitals or may
be outsourced by the Hospitals from outdoor caterers. When outsourced, there should be no ambiguity that
the suppliers shall charge tax as applicable and hospital will get no ITC. If hospitals have their own canteens and prepare their own food; then no ITC will be available on inputs including capital goods and in turn if they supply food to the
doctors and their staff; such supplies, even when not charged, may be subjected to GST.

Health care services provided by a clinical establishment, an authorized medical practitioner or para-medics are exempt. [Sl. No. 74 of notification No. 12/2017- CT(Rate) dated 28.06.2017 as amended
refers].(1) Services provided by senior doctors/ consultants/ technicians hired by the hospitals, whether employees or not, are healthcare services which are exempt.(2) Healthcare services have been defined to mean any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India [para 2(zg) of notification No. 12/2017- CT(Rate)]. Therefore, hospitals also provide healthcare services. he entire amount charged by them from the patients including the retention money and the fee/ payments made to the doctors etc., is towards the healthcare services provided by the hospitals to the patients and is exempt.

(3) Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable.

6.

Appropriate clarification may be issued regarding taxability of Cost Petroleum.

As per the Production Sharing Contract(PSC) between the Government and the oil exploration & production contractors, in case of a commercial discovery of petroleum, the contractors are
entitled to recover from the sale proceeds all expenses incurred in exploration, development, production and payment of royalty. Portion of the value of petroleum which the contractor is entitled to take in a
year for recovery of these contract costs is called “Cost Petroleum”.The relationship of the oil exploration and production contractors with the Government is not that of partners but that of licensor/lessor and licensee/lessee in terms of the Petroleum and Natural Gas Rules, 1959. Having acquired the right to explore, exploit and sell petroleum in lieu of royalty and a share
in profit petroleum, contractors carry out the exploration and production of petroleum for themselves and not as a service to the Government. Para 8.1 of the Model Production Sharing Contract (MPSC) states that subject to the provisions of the PSC, the Contractor shall have exclusive right to carry out Petroleum
Operations to recover costs and expenses as provided in this Contract. The oil exploration and production contractors conduct all petroleum operations at their sole risk, cost and expense. Hence, cost
petroleum is not a consideration for service to GOI and thus not taxable per se.However, cost petroleum may be an indication of the value of mining or exploration services provided by operating member to the joint venture, in a situation where the operating member is found to be
supplying service to the oil exploration and production joint venture.

2. Difficulty if any, in the implementation of this circular may be brought to the notice of the Board. Hindi version would follow.

A high-powered group of ministers will meet every fortnight to resolve over two dozen technical glitches identified in the GST tax portal GSTN, the panel’s head and Bihar Deputy Chief Minister Sushil Modi has said.

Over 25-odd glitches, which had led to the GST-Network portal crashing on at least two occasions in the very first month of filing, relate largely to payments and registration, he told PTI after the five-member GoM held its first meeting in Bengaluru on Saturday.

The grouping had extensive interaction with executives of Infosys, which is providing the IT support for the portal, and businesses will notice a “lot of difference” on the GSTN portal in the next 7-10 days, Modi said.

The GSTN website had faced glitches last month as taxpayers flogged to the portal on the last day of the deadline of filing returns for July.

“Over 25 issues have been identified which needs to be resolved and timelines have been set for each of them. Overall, we are satisfied with the performance of GSTN and Infosys is doing its best to make it error free,” said Modi.

The GSTN, the information technology backbone and portal for real-time taxpayer registration, migration, and tax return filing under the GST, had developed a snag last month when the first deadline for filing of returns approached, forcing the government to extend the last date. A five-member GoM was constituted on September 12 after the GST Council decided to sort out technical glitches. The first meeting of the GoM was held in Bengaluru on September 16.

Modi said the GoM noted that the tendency of taxpayers is to file returns on the last day, which is evident from the fact that only 3.5 lakh taxpayers have so far filed GSTR-3B for the month of August. The last date for filing is September 20.

Over 47 lakh returns in GSTR-3B was filed in July and the GST to the tune of Rs 95,000 crore was collected in the maiden month of roll-out.

On September 15, GSTN officials and state commercial tax officers also held meetings with bankers, large taxpayers and tax experts to decipher the procedural issues being faced by them on the portal.

“The GoM will meet every 15 days to review the functioning of GSTN. The GSTN system is robust and load is not an issue. We are considering the procedural issues,” Modi said.

So far, over 22 crore invoices have been uploaded on the GSTN portal, which has a capacity of handling over 3 billion invoices.

GSTR-3B is only a simple return which will ease compliance burden of businesses. Businesses will have to upload invoices and file final returns in form GSTR-1, 2 and 3 on a stipulated date.

The GST Council, chaired by Finance Minister Arun Jaitley and comprising state counterparts, had last week decided to extend the last date for filing final returns for July by a month to October 10. GSTR-2 for July will have to be filed by October 31 and GSTR-3 by November 10.

Currently, there are over 85 lakh registered taxpayers under the Goods and Services Tax regime. This include 62 lakh assessees who have migrated from the excise, service tax and VAT system and another 23.18 lakh new registration.

Among this, 10.96 lakh businesses have opted for composition scheme, under which they have to file returns quarterly.

Even after seven month of GST implementation, industry is concerned with glitches in GST portal, cumbersome return filing process and e-way Bill, according to a survey done by Ficci.

“All respondents of the survey pointed out issues with the robustness and volume handling capacity of the GST portal. Problems like delayed reflection of updated data as well as payments, delays in process of input credit set offs, inability to upload heavy files of certain formats and lack of provision to modify or revise errors posed major challenges to businesses,” said Ficci.

It said that respondents suggested that a major revamp of the portal was necessary to make it more efficient. There should be provisions for auto set off of the liability against available credit, it said.

Around 59 per cent respondents to the survey comprised of MSME firms whereas the rest 41 per cent were large firms, said Ficci.

“The other pressing issue that all respondents of the survey raised was the cumbersome procedures and documentation for filing of returns. Monthly filing of GST return has been cited as a cumbersome procedure,” said Ficci.

It said that around 78 per cent of the respondents suggested that the periodicity of return filings for those taxpayers having aggregate turnover above Rs 1.5 crore should be changed from monthly to quarterly.

“For services providers, multiplicity of registrations was a concern as a separate registration is now required with every state where service is being provided,” said Ficci.

There should also be a centralised registration for inter-state services, it said.

Implementation issues related to e-way Bills also are also bothering traders. E-way bill is an electronically generated document which is required for the movement of goods of more then Rs 50,000 from one place to another.

All respondents of the survey pointed out issues with the robustness and volume handling capacity of the GST Portal. Problems like delayed reflection of updated data as well as payments, delays in process of input credit set offs, inability to upload heavy files of certain formats and lack of provision to modify or revise errors posed major challenges to businesses. Respondents suggested that a major revamp of the portal was necessary to make it more efficient. There should be provisions for auto set off of the liability against available credit.

Feedback on Return Filing

The other pressing issue that all respondents of the survey raised was the cumbersome procedures and documentation for filing of returns. Monthly filing of GST return has been cited as a cumbersome procedure. Around 78% of the respondents suggested that the periodicity of return filings for those taxpayers having aggregate turnover above Rs. 1.5 crore should be changed from monthly to quarterly. For services providers, multiplicity of registrations was a concern as a separate registration is now required with every state where service is being provided. Respondents to the survey emphasised that filing of returns be made simpler.There should also be a centralised registration for inter-state services.

Feedback on e-way bill

All respondents have cited likely implementation issues upon the introduction of e-way bill. The respondents found the current limit of 10 kms for the purpose of updating details of goods on the portal to be inadequate. Respondents, especially small businesses, felt that e-way bill need not be introduced as it was only an additional compliance requirement as all details of sale and purchase were readily available on the portal. It was suggested that the minimum limit for requirement be increased to 50 kms and there be no requirement of e-way bill for movement of goods within the city limits.

Businesses, especially exporters faced difficulty to claim refunds. The mismatch between shipping bill date and tax invoice date does not allow initiating refund of IGST paid on exports. They have suggested that this condition of matching shipping bill date and tax invoice should be waived off. Firms which supply raw materials to its SEZs locations located in other states is liable to GST as such a transfer is considered sales and is not getting a zero-rating benefit. Such transfers for captive consumptions should not be charged under GST.

Most respondents also stated that there is a need for greater clarification from the Government on the anti-profiteering provisions to ensure that they do not lead to undue harassment.

The committee tasked with simplification of GST returns filing will consult tax experts and trade bodies to make the process convenient for businesses that have minimal transactions, its chairman said today.

“We are also discussing with experts and taking opinion from various other stakeholders as to what simplification could be achieved. The whole idea is that people who are nil filers, who have no sale/purchase transactions, have taken a registration for some future use, they should be able to file GSTR-1 and GSTR-3B by pressing just a few buttons. That is our ultimate aim,” Pandey told PTI.

As many as 40 per cent of the businesses filing returns on GST Network (GSTN) portal has nil tax liability.

The Goods and Services Tax (GST) Council had set up this committee on November 10 to suggest ways for simplification of the returns filing process. It has also decided to keep in abeyance till March 31 the filing of GSTR-2 (purchase returns) and GSTR-3 (the matching of sales and purchase returns).

“The committee would look into simplification exercise because all (GST returns) are intricately connected,” Pandey said, when asked if the committee would focus on only GSTR-2 and GSTR-3 or all the returns under GST.

The committee will collect feedback from people, the trade and industry and study the whole system in detail and then come out with an appropriate plan.

“If people have very minimal transactions, they should be able to file both the returns in a manner without going through full complications. Therefore, the display of the forms will be based on certain questions and the questions posed to the dealer,” Pandey said.

He added that the panel will also look into what information on returns should be taken and at what frequency.

Pandey said the ultimate goal will be to provide convenience to people so that those who are filing the returns can do so without any difficulty.

According to the data, 55.87 lakh GSTR-3B returns were filed for July, 51.37 lakh for August and over 42 lakh for September. Preliminary returns GSTR-3B form for a month is filed on the 20th day of the next month after paying due taxes.

According to the GSTN data, a huge chunk of businesses files their returns after the expiry of the due date.

While only 33.98 lakh July returns were filed by the due date, the number has now gone up to 55.87 lakh. Similarly, for August, 28.46 lakh returns were filed until the last date, but the figure went up to 51.37 lakh later.

Also, for September, while 39.4 lakh returns were filed by the due date, the number is rising and was over 42 lakh until October 24.

Also, the Council earlier this month substantially lowered late return filing fees for businesses from the Rs 200 at present. Businesses with nil tax liability will now have to pay only Rs 20 as late fee for the delayed filing of return while for the rest, the fee is Rs 50.

The anti-profiteering measures enshrined in the GST law provide an institutional mechanism to ensure that the full benefits of input tax credits and reduced GST rates on supply of goods or services flow to the consumers.

The Union Cabinet on Thursday gave its approval for the creation of the posts of chairman and technical members of the National Anti-profiteering Authority (NAA) under GST, following up immediately on yesterday’s sharp reduction in the GST rates of a large number of items of mass consumption.

This paves the way for the immediate establishment of this apex body, which is mandated to ensure that the benefits of the reduction in GST rates on goods or services are passed on to the ultimate consumers by way of a reduction in prices.

The establishment of the NAA, to be headed by a senior officer of the level of secretary to the government with four technical members from the Centre and/or the States, is one more measure aimed at reassuring consumers that government is fully committed to take all possible steps to ensure the benefits of implementation of GST in terms of lower prices of the goods and services reach them.

It may be recalled that effective from midnight of 14th November, the GST rate has been slashed from 28% to 18% on goods falling under 178 headings. There are now only 50 items which attract the GST rate of 28%. Likewise, a large number of items have witnessed a reduction in GST rates from 18% to 12% and so on and some goods have been completely exempt from GST.

The ‘anti-profiteering’ measures enshrined in the GST law provide an institutional mechanism to ensure that the full benefits of input tax credits and reduced GST rates on supply of goods or services flow to the consumers.

Affected consumers who feel the benefit of commensurate reduction in prices is not being passed on when they purchase any goods or services may apply for relief to the Screening Committee in the particular State.

However, in case the incident of profiteering relates to an item of mass impact with ‘All India’ ramification, the application may be directly made to the Standing Committee. After forming a prima facie view that there is an element of profiteering, the Standing Committee shall refer the matter for detailed investigation to the Director General of Safeguards, CBEC, which shall report its findings to the NAA.

The authority is to ensure benefits of the GST rate cut are being passed on to the consumers

The Union Cabinet on Thursday approved setting up of a National Anti-profiteering Authority under the GST, seeking to ensure consumers get the benefit of reduced prices under the new indirect tax regime.

Union Minister Ravi Shankar Prasad said currently there were only 50 items that attracted the highest tax of 28% under the Goods and Services Tax (GST) regime and rates on many items have been cut to 5% as well.

“The National Anti-Profiteering Authority is an assurance to consumers of India. If any consumer feels that the benefit of tax rate cut is not being passed on, then he can complaint to the authority,” Mr. Prasad told reporters after the Cabinet meeting.

This reflects government’s full commitment to take all possible steps to ensure benefits of implementation of GST to the common man, the minister added.

The approval by the Cabinet paves the way for immediate establishment of the apex body, which is mandated to ensure that the benefits of GST rate reduction is passed on to consumers.

The GST Council, chaired by Union Finance Minister Arun Jaitley and comprising state counterparts, had last week decided to slash tax rates of over 200 items in the GST regime as well as lowered tax rates on AC and non-AC restaurants to 5 per cent.

The Council had earlier approved setting up of a five-member National Anti-Profiteering Authority to enable consumers to file complaint in case price reduction was not passed on.

A five-member committee, headed by Cabinet Secretary P.K. Sinha, comprising Revenue Secretary Hasmukh Adhia, CBEC Chairman Vanaja Sarna and chief secretaries from two states, has been entrusted to finalise the chairman and members of the authority.

The authority will have a sunset date of two years from the date on which the chairman assumes charge. The chairman and the four members of the authority have to be less than 62 years.

As per the structure of the anti-profiteering mechanism in the GST regime, complaints of local nature will be first sent to the state-level ‘screening committee’, while those of national level will be marked for the ‘Standing Committee’

If the complaints have merit, the respective committees would refer the cases for further investigation to the Directorate General of Safeguards (DGS). The DG Safeguards would generally take about three months to complete the investigation and send the report to the anti-profiteering authority.

If the authority finds that a company has not passed on GST benefits, it will direct the entity to pass on the benefits to consumers. If the beneficiary cannot be identified, it will ask the company to transfer the amount to the ’consumer welfare fund’ within a specified timeline.

The authority will have the power to cancel registration of any entity or business if it fails to pass on to consumers the benefit of lower taxes under the GST regime, but that might be the final step.

According to the anti-profiteering rules, the authority will suggest return of the undue profit earned from not passing on the reduction in incidence of tax to consumers along with an 18% interest, as also impose penalty.

Ecommerce Association of India (ECAI) welcomes the government’s decision for allowing 100% FDI in marketplace eCommerce. This is certainly a way forward in fuelling the growth of eCommerce in India.

India has seen a very high growth in the marketplace eCommerce, which has in turn thrived many new manufacturers, traders and suppliers providing them limitless market with larger customer base. The industry has seen numerous success stories of startups and entrepreneurs and unabated growth. And, moreover, the government’s support and regulation shall make the growth process long-lasting and more stable.

With 100% FDI on the cards, the marketplace eCommerce companies expect to see a larger influx required for the next phase of growth. Existing marketplaces would grow bigger and the newer marketplaces may come up. We may also see niche marketplaces coming up and ultimately everything will lead to bigger opportunities for the sellers. The move will allow more capital infusion in the sector from the foreign investors and the same can be used for financing their development needs.

The marketplace model has been a big driver of growth for the small businesses which again has been on the priority list of the government. Many young entrepreneurs have benefitted from the marketplace model with the large market reach and larger customer base. They are now able to access a pan-India market which was not possible earlier for a small business with very low or zero marketing budget. Since the marketplace manage the entire logistics of sales and even return, the small businesses do not have to invest or manage the same. The marketplace model has also increased the efficiency of the small businesses. With almost 350 million internet users and almost 800 million mobile users and that too a considerable number using smartphones, it offers even a larger opportunity for the eCommerce companies.
Equitable growth

Though the honeymoon discount period may gradually fade away, but the growth will now be more structured and equitable among players. The sales shall also be not discount-driven, and this would be good for the smaller players with less funding support. They would not have to follow the discount race, as they do not have large bellies to do that. So, things will gradually fall in line in the larger interest of the industry.
The marketplace model also compliments the brick and mortar stores. Of late, the physical stores have also got a larger bandwidth of market space through eCommerce. They are now able to sell to a larger number of customers, and also the eCommerce players are also going offline.

The era of discounting will gradually be corrected, and this will certainly give more opportunities for the brands to reach out to larger pool of young customers through the online marketplace. Hence, the role of eCommerce players become even more important, as they have a huge young customer base following. Also, the rise of mCommerce has given rise to a convenience marketplace where anything and everything can be sold at the convenience of customers.

The government has been looking forward to support the growth of eCommerce industry and we are hopeful that we would see more such pro-industry moves by the government for the sector that has been the largest employment generator for the economy in the last five years. The eCommerce sector has also given rise to a more structured and organised businesses, as all the transactions are recorded. This helps in checking tax evasion and illegal transactions.

Also, with the government’s focus on building a strong manufacturing base in India, eCommerce can play an enabling role for manufacturers and suppliers to access the consumer base. With the borderless market, the manufacturers and suppliers can access any regional market and even global market as well.
(The author is the secretary general at e-Commerce Association of India)